Highlights from Berkshire Hathaway’s 2008 Letter to Shareholders

Berkshire Hathaway released Warren Buffett’s annual letter to shareholders on Friday (Feb 27), you can find it here:

It’s a fascinating business read about fear, responsibility, and opportunity. Some highlights:

– 2008 was the worst year of performance in 44 years (book value and S&P500 Index)

– It’s all about Fear:

Berkshire Hathaway released Warren Buffett’s annual letter to shareholders on Friday (Feb 27), you can find it here:

It’s a fascinating business read about fear, responsibility, and opportunity. Some highlights:

– 2008 was the worst year of performance in 44 years (book value and S&P500 Index)

– It’s all about Fear:

“By the fourth quarter, the credit crisis, coupled with tumbling home and stock prices, had produced a paralyzingfear that engulfed the country. A freefall in business activity ensued, accelerating at a pace that I have never before witnessed. The U.S. – and much of the world – became trapped in a vicious negative-feedback cycle. Fear led to business contraction, and that in turn led to even greater fear.”

– The Government intervention will “almost certainly bring on unwelcome aftereffects” (including an onslaught of inflation), yet “strong and immediate action by (the) government was essential…if the financial system was to avoid a total breakdown” with “cataclysmic” consequences.

– Without Fail, we’ve overcome “far worse travails.”

– Warren Buffett takes candid, personal responsibility:

“During 2008 I did some dumb things in investments. I made at least one major mistake of commission and several lesser ones that also hurt. … Furthermore, I made some errors of omission, sucking my thumb when new facts came in that should have caused me to re-examine my thinking and promptly take action.”

– There are opportunities in a down economy:

We “feel like two hungry mosquitoes in a nudist camp. Juicy targets are everywhere.”